Introduction of e-invoicing (Part 1)

In our experience, a significant number of Hungarian businesses are still not taking advantage of the electronic invoicing option, despite the administrative and cost savings it would have brought them compared to traditional invoicing. In today's newsletter, we summarise the key facts about e-invoicing.

The European Union attaches great importance to electronic invoicing. The EU initiative called "VAT in the Digital Age" is underway and is intended to result in a proposal for amendments in the current legislation regulating three important areas: single VAT number, e-invoicing and digital reporting, as well as platform economy.   

At the invitation of the European Commission, the EU VAT Expert Group (“VEG”), which assists and advises the European Commission in the preparation of legislative proposals and policy initiatives on VAT matters, met again on 10 June 2022. One of the items on the agenda of the meeting was e-invoicing, where the VEG launched a technical discussion along the lines indicated.

As is seen from the above, e-invoicing will definitely become a more important issue for the European Union in the near future. In this context, we give a brief overview of the current Hungarian e-invoicing rules and the services provided by VGD Hungary in this field.    

What is an e-invoice?

An invoice is an e-invoice if it contains the invoice data set out in Sections 169 - 172 of the Hungarian VAT Act and is issued and received in electronic form.

A company may issue e-invoices to its business partners if the recipient of the e-invoice has agreed to receive e-invoices. However, implied consent should also be acceptable, i.e. if the recipient does not refuse to accept the e-invoice, then it is deemed to have agreed to this solution. In addition, it is, of course, recommended that the companies agree with their business partners on e-invoicing in a written contract.

The e-invoice must jointly meet the following three conditions:

• the authenticity of its origin;
• the integrity of its contents;
• legibility.

Electronic invoices can only be stored as electronic data. It follows that neither the company, nor the invoice recipient, nor the accountant need to print out e-invoices and keep them in hard copy form. This saves significant printing, mailing and storage costs for companies using e-invoicing.

Printing an electronic invoice is not prohibited by law, but it qualifies as an accounting document only if it is kept in electronic form.

There are two options for issuing an e-invoice:

• Invoice sent electronically (by email), or
• Using an e-invoice based on the XML scheme approved by the Hungarian tax authority (“NAV”).

In recent years, the legal framework has changed to make it much easier to issue and store e-invoices. For example, a time stamp is no longer required and a plain invoice sent in pdf format can be compliant.

Our e-invoicing services

If your business is planning to migrate to NAV XML-based or other e-invoicing formats in the near future, VGD's team of experts is ready to assist you with the following services:

• Pre-implementation advising;
• Advice on setting up a new system;
• Audit of the existing system to assess compliance with the legal requirements in force;
• Advice on the detailed rules of the NAV XML-based e-invoicing, design of such system;
• Reviewing the NAV XML file, checking its completeness, interpreting the error messages received and suggesting improvements;
• Review existing XML file to determine legal compliance;
• Implementation of e-invoicing and related automation and IT services.

7 July, 2022

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Should you have any questions regarding this newsletter,
the accounting and tax experts of VGD Hungary will be pleased to assist you.

This newsletter provides general information and does not constitute professional advice